Election 2024: Labour looking to extend day one employment rights

In this second instalment, Alex Haines examines the proposed employment law reforms from the major political parties and looks at Labour’s manifesto pledge to extend day-one rights to all.

Labour – Day One Rights Afforded to All

Labour’s manifesto has confirmed that they will implement the proposals in their ‘New Deal for Working People’ green paper. This means that in addition to unifying the categories of “worker”, Labour will also pledge to end the current qualifying periods for basic rights, including:

• protection against unfair dismissal;
• sick pay; and
• parental leave.

Unfair Dismissal

Beginning with the proposed reforms to unfair dismissal legislation, currently, employees need two years’ continuous service with an employer before they can bring claims for most unfair dismissals. There are already some exceptions to this, for instance if the main reason for dismissal is:

• making a protected disclosure (whistleblowing);
• being a trade union member or representative;
• relating to pregnancy or maternity leave; or 
• proposing to or acting over a health and safety issue.

Labour is proposing to reform the law around unfair dismissal by ending the two-year qualifying period for standard unfair dismissal claims and removing the caps on levels of compensation awarded to claimants by the Employment Tribunals. Extending the usual time limits to bring claims in the Employment Tribunals is also proposed. 

• The current limit is generally three months less a day from the date of the act complained of/effective termination (last date of employment).  
• Labour would double this to six months to align with time limits for statutory redundancy and equal pay claims.

Employers might be concerned that these reforms may expose them to increased claims. 

Whilst it remains to be seen how these concerns may play out in practice, employers should heed the adage that prevention is better than the cure. It pays to have good processes in place to ensure that the best candidates are selected for roles for objective reasons through consistent, non-discriminatory processes. Employers may need greater care in their recruitment processes to ensure new recruits will be a good match for the organisation. This may lead to longer and/or delays in the recruitment process and create further costs. Regardless of whether Labour forms a government and implements this policy, by taking extra care in the recruitment process and thinking about reviewing policies and procedures, including probationary periods and how these are managed (see also below), employers can make better hires and manage the onboarding process that will hopefully reduce the risks of claims through the Tribunals.  

Indeed, whilst it was initially promised that all workers would have access to these rights from day one, this has subsequently been caveated to be subject to “probationary periods with fair and transparent rules and processes”. This could lead to extended probationary periods, which would then lead to further uncertainty for workers, but should, if applied correctly, provide the opportunity for employers and employees to test a new employee’s suitability for a role and assess what support and guidance can be offered to give new joiners the best chance to succeed in a role. Not only would this reduce the risk of claims, but it will also help to nurture and retain talent in the ongoing battle of the cost and time-to-hire challenges around recruitment facing so many employers. Employers could also consider shortening any notice periods to protect their position better. 

An employer may also wish to consider their capacity to offer training and support to new recruits. This may help to mitigate and manage any capability concerns rather than dismissing an individual at an early stage. 

As always, employers should review their procedures to ensure that they are fair and in compliance with legislation. We strongly encourage employers to always follow their disciplinary procedures and comply with the ACAS code of practice on disciplinary and grievance procedures to give the best chance to defend speculative claims. 

Sick Pay

Labour’s changes to sick pay will cover three main areas and largely align with the suggestions of the Chartered Institute of Personnel and Development (CIPD) contained within their Manifesto for Good Work published in September 2023. The proposed reforms will:

1. remove the three-day waiting period for claiming statutory sick pay (SSP);
2. remove the lower earnings limit and 
3. offer a fair earnings replacement for people earning below the current rate of SSP.

SSP can be claimed where an individual is absent through illness on a qualifying day, i.e. a day on which that individual is required to work. However, SSP can only be claimed from the fourth consecutive day of absence and is irrecoverable for the first three days, known as “waiting days”. This delays payment and is especially problematic for part-time employees who may only work two or three days per week. In these circumstances, it could be several weeks before the employee becomes entitled to SSP. Waiting days are also reset after each period of incapacity (four or more consecutive days where the employee cannot work owing to sickness) unless the periods are linked to the employee not working for four consecutive days within an eight-week period. 

Labour would seek to remove the requirement for waiting days before an individual becomes entitled to SSP and hope that this will encourage those who are ill to take the time to recover and not feel they must work despite being unfit to do so by providing some financial support.

The second proposed reform to remove the lower earnings limit would see SSP eligibility extended to all employees irrespective of their salary. SSP is currently available to employees (and workers) who are liable for Class 1 National Insurance Contributions. The employee (or worker) must earn an average of £123 per week. 

Those not meeting this threshold currently could be eligible for universal credit or a new style employment support allowance (“new style ESA”). Labour hasn’t disclosed whether individuals will be entitled to the new style ESA in the final three months of their 28-week SSP entitlement or whether this benefit will continue to exist after their proposed SSP expansion. 

It is unclear what the final reform to make SSP a fair earnings replacement will entail. The CIPD’s Manifesto for Good Work suggests that SSP should be raised closer to the equivalent earnings an individual might expect to receive on the National Minimum Wage or National Living Wage. The CIPD also considered whether SSP should be linked to an individual’s earnings but stopped short of offering a formula or a recommendation to apportion the costs of raising SSP between the government and the employer. 

Regardless, it remains in an employer’s interest to ensure that its workforce is fit for work to maximise productivity. It is also in the employee’s interest to take any time off needed so that their condition is not worsened by returning to work too soon, potentially affecting their recovery.

Parental Leave

Labour has committed to reviewing the parental leave system and implementing reforms so that it “best supports working families”. Whilst other changes to the parental leave system remain unclear, Labour has stated that it will be a day-one right. 

Currently, parental leave is only available to employees who have continuously been employed for a period of not less than one year and who have, or expect to have, responsibility for a child. It confers a right for these eligible employees to take up to 18 weeks’ unpaid parental leave for the purpose of caring for that child. There are nuances to the taking of the leave and whilst the leave can be taken at any point before the child’s 18th birthday, an employee can only take a maximum of four weeks leave in respect of an individual child per calendar year. This leave can be delayed by the employer and can only be taken in blocks of single or multiple weeks. Employees can also expect to return to the same job after their leave, except in certain circumstances. 

Read in conjunction with Labour’s proposal to introduce a single status of “worker”, it is likely that parental leave will be extended to all workers and employees alike (applying current statuses). It remains unclear at time of writing what further changes Labour would make to parental leave short of launching a review of the parental leave system in the first year of a Labour government. As a result, there is little that employers can do at present short of considering the impact of the increased pool of staff who would be able to take this leave and whether their policies around parental leave need to be updated.